Starbucks has become one of the most recognised brand in the world, known for selling highest quality coffee products. The company discovered that there was a potential in beverage retailing and today operates 8337 stores worldwide. The founder, Howard Schultz started in Seattle with a concept of high quality product in a relaxed atmosphere. But a new market is always a new challenge and carries an amount of risk for a company.
This assignment is going to analyse the company's international expansion through local culture and guidance notes will be given.
Starbucks international strategy was to develop the brand and its strengths in a variety of countries. In 1996, the first country "invaded" was Japan, and even though there was a 1000 years tea history, the company successfully managed to grab customer's attention to a new concept.
The strengths from the American market were exported worldwide, to give an image of a product that suits everyone.
But the operation strategies differed; Starbucks decided to operate through a number of joint ventures and licensing arrangements with prominent retailers to gain an easier access to new markets and dominate it, before moving further to new potential markets (differing from American approach where the stores are largely company-owned). The reason was that when entering a new market, major factors where important such as the local competition and issues related to price and cost. Starbucks had to conform itself to the economic scale already present in specific market and result to a cost disadvantage (resulting in production, marketing, research and development constraints), consequently the company acquired in 1998 the Seattle Coffee Company in the UK to access a new market easily. The idea is that an experienced local partner can help identify locations, sift through tax issues and give Starbucks stores more community appeal.